November 28, 2022

A tax saving mutual fund is an excellent way to invest in the stock market without incurring high taxes. However, not all of them offer the same returns. Therefore, you must compare the returns of different tax saving funds over different time periods. Ideally, you should compare the returns over three years. You can also use an app to help you compare different funds.

Tax saving mutual funds are managed by professionals with extensive experience in maximizing returns and minimising risk. They charge a small fee to manage the funds but this is a small price to pay for the opportunity to maximize returns. A tax saving mutual fund is a good choice for investors with a long-term investment horizon.

These funds follow the same investment strategy as diversified equity funds. Their aim is to invest in a broad portfolio of quality stocks without sector or market capitalization bias. They are also locked for three years, which is advantageous for fund managers as it allows them to take longer calls and deploy funds without fear of premature redemption. An ELSS fund is particularly suited for people who have a long-term investment horizon, since the tax savings from compounding over time can multiply your wealth.

Canara Robeco Equity Tax Saver Fund: This fund is among the oldest tax saving funds in the industry. It has achieved an average return of 15% in the last 29 years, despite its relatively small AUM of Rs 4.198 crore. It has seen eight fund managers since 2008, and has beat its benchmark eight times in the last 11 years.

Mirae Asset Tax Saver Fund Direct-Growth: This tax saving mutual fund aims to generate long-term capital appreciation. It is also known as the best tax saving mutual fund for the next three years. Another fund to consider is IDFC Tax Advantage (ELSS) Direct-Plan-Growth, which seeks to build a diversified portfolio of stocks with sound fundamentals.

Best Tax Saving Mutual Funds: Investing in the best tax-saving mutual fund is a smart move. You’ll get better returns if you choose a fund with a low expense ratio. Expense ratio is a measurement of how much money investment companies are spending on the management of the fund. The lower the expense ratio, the higher the profit. For example, an average fund has an expense ratio of 0.5 to 1.5%.

Systematic Investment Plan: Using a systematic investment plan helps you save on taxes by diversifying your investments. You can invest as little as Rs 500 a month with a systematic investment plan. However, if you want the maximum tax deduction, you need to invest at least Rs 1.5 lakh or more monthly.

Leave a Reply

Your email address will not be published. Required fields are marked *